THE DATA ACT: Unfunded Mandate or Core Requirement?

On May 9, 2014, President Obama signed the DATA Act. The purpose is to improve the accuracy, timeliness and accessibility of Federal spending so that the public is better informed and better decisions can be made by policy makers.
The DATA Act is very broad in scope basically encompassing all Federal spending with some exceptions for national security. It also requires that data standards be developed and enforced and data be reported at very detailed levels. Spending data will be accessible to the public and policy makers on an existing Federal website, USASpending.gov. Treasury and OMB are also required to establish data standards. For such a sweeping change, the three year implementation schedule is very aggressive.

Challenges—Funding and Technology

When Congress passed this legislation it did not include any additional funding for its implementation. Many agency managers feel that they are already juggling many priorities and now they have been handed yet another one that may not seem crucial to support their program responsibilities. After all agencies already provide a huge amount of information to the public and policy makers and some managers probably wonder whether this additional data is really necessary.
In addition to the lack of new funding, to garner useful information from USASpending.gov requires great persistence, considerable knowledge of Federal agencies and a good dose of luck. Contrast that experience with using Google, Bing or Amazon.

Why Necessary

Is the current Federal spending information sufficient? The answer is a resounding “no”. First, everything isn’t being reported accurately. A 2014 GAO review found that for fiscal 2012, $619 billion in federal grants or loans were not properly reported in USASpending.gov.
Second, program managers do not have easy access to comprehensive information at the program level. For example, in 2013 when Federal officials were trying to determine the various Federal funds being received by Detroit as that city was on the brink of bankruptcy, that information was not available. Instead, through reverse engineering information was obtained although it took weeks to do so and it was most likely incomplete. Lack of good information is also very damaging in times of natural disasters. During the aftermath of hurricane Katrina and Super Storm Sandy if Federal and state officials had more complete and timely information on what Federal funds were being expended it could have improved the response to those devastating storms.

So, once data standards are in place will that solve the problem of data being inaccurate or incomplete? Unfortunately it will not. The data standards—coupled with a few unique tracking identifiers—do however provide the foundation to support more accurate data. It will take strong management support at the agencies to make sure the standards and identifiers are followed and that appropriate controls are in place to verify accuracy. In addition, Treasury and OMB will need to carefully monitor compliance and require agencies to correct deficiencies. The audit community also has an important role here.

Even if all of those points are valid, isn’t the DATA Act still an unfunded mandate?The answer is “yes” and “no”. It is true that there were no additional funding provided for agencies—or Treasury and OMB for that matter—to implement the DATA Act. It may well be necessary for agencies to obtain some additional funds to successfully implement the DATA Act. At the same time many of the requirements of the Act are inherent in the proper management of existing government programs and operations. Federal program managers and other officials should have quick and accurate information on funds being paid through contracts and grants and use that information to manage their programs. State and local entities should be able to see what Federal funds are being provided to their State and compare that to funds flowing to other states. Grant award recipients and contractors should be able to check on the distribution of grant awards. Citizens should be able to view the flow of Federal funds by recipient location or program.

Despite the lack of current funding, there are several approaches that can help agencies implement the requirements of the DATA Act:

Treasury and OMB have adopted an implementation approach that should greatly reduce the impact on agencies. Rather than follow the traditional path of building a large database or have each agency significantly modify their systems, Treasury and OMB are examining ways to extract data that meets agreed upon data standards from agency systems and posting that information on the USASpending.gov website.

Using new technologies and innovative approaches, Treasury and OMB can quickly and relatively inexpensively conduct a series of pilots to determine the best approach or approaches to implement the DATA Act while reducing agency burden.

There is considerable potential for agencies to reduce the burden of implementing the DATA Act by agencies moving to a Federal Shared Service Provider (FSSP). For agencies already using an FSSP such transitions are much less burdensome.

Agencies also have the opportunity to reduce costs by implementing other shared services such as one of the electronic invoice processing systems. For example, in one year the Department of Agriculture converted all of its components from paper to Treasury’s electronic invoice system and improved service while significantly reducing internal costs. Agencies can also take advantage of the centralized account receivable service currently offered by Treasury.

In the longer term there should be cost savings or cost avoidance by having better data to make program decisions. Also, moving to shared services should reduce overall costs for program agencies.

Implementing the DATA Act will require creativity, perseverance and constant communication. I believe that Treasury, OMB and the agencies have moved creatively, quickly and openly and are on the right course to achieve the goals of the DATA Act. Much work remains. The private sector, transparency groups and state and local entities can greatly assist the Federal government achieve the important goals of the DATA Act.

Dick Gregg is the former Fiscal Assistant Secretary of the Treasury. As the Fiscal Secretary he was responsible for developing policy and overseeing the operations of the financial infrastructure of the Federal Government. Dick also served as the Commissioner of the Financial Management Service as well as numerous other management positions with the Treasury Department. Among his many accomplishments Dick modernized the savings bond and government-wide accounting programs, moving towards an all-electronic Treasury environment.